Millionaire migration: Here's where they're going.

The number of people earning $1 million or more annually soared during the pandemic, but that growth wasn't evenly distributed across the country, and experts say there are good reasons why some states saw a greater increase among seven-figure earners than others.

According to Internal Revenue Service data reviewed by The Business Journals, there was a median 47% increase in million-dollar earners between 2020 and 2021 across the 50 states and the District of Columbia. Louisiana, however, saw an 83% boost, nearly doubling its count of seven-figure earners from 3,800 in 2020 to 6,940 in 2021. Montana saw a 73% jump, and Vermont posted a 63% increase.

Scott Fulford, senior economist at the Consumer Financial Protection Bureau and author of "The Pandemic Paradox: How the COVID Crisis Made Americans More Financially Secure," said much of the growth seen in select states can be attributed to migration patterns that occurred during the pandemic. 

“Starting in 2020 but accelerating into 2021, many high-income people whose jobs were remote moved to less-expensive areas. Top destinations included Montana and Idaho, as well as other states such as Vermont and West Virginia — which are close enough to big metropolitan areas to still make the occasional trip,” Fulford said.

“Many of the states with the largest increases gave grants or tax advantages for remote workers, including Hawaii, West Virginia, Vermont and Louisiana.”

Fulford said Louisiana and Montana saw big percentage increases precisely because they had a smaller population of millionaire earners to begin with — so even small numbers in absolute terms mean big increases. States that already were home to many millionaire earners, such as Texas and Florida, saw smaller percentage growth even if the numbers of new seven-figure earners in those states were bigger. 

Fulford added that the pandemic was a great time for people who could reap the benefit of capital gains, so it's likely that among the higher earners were people whose incomes breached the seven-figure threshold amid runaway growth in the stock market.

Andrew Latham, a certified financial planner with SuperMoney.com, said while it's hard to establish direct links, the big increase in million-dollar earners in places like Louisiana and Montana likely could be attributed to robust economic growth in those states as well as the rise in remote work.

“In Louisiana, the rapid recovery of the petrochemical sector and increased activity at strategic ports — spurred by a rebound in global trade — have notably fueled local economies,” Latham said. “Montana, conversely, has benefited from the expansion of its tourism and tech industries.”

Latham said Louisiana and Montana both offer compelling tax advantages, as well. In Louisiana, the absence of a state-inheritance tax, favorable capital-gains treatments and tax credits for investments have fostered an environment ripe for wealth accumulation. Montana similarly has no sales tax or state-inheritance tax and has competitive income tax rates with substantial deductions and exemptions.

The booming real estate market during the pandemic also boosted the rise in millionaire earners, Latham said.

“This blend of favorable tax policies, strategic economic growth, and lifestyle-driven migration — underscored by the broader shift towards remote work — has contributed to a sharp rise in high earners. However, this trend is not isolated to Louisiana and Montana. States like Florida, Texas, Washington, Nevada and Tennessee are also leveraging their tax advantages and economic opportunities to attract high earners,” Latham said.

The number of households nationally earning $1 million or more a year increased four-fold between 2017 and 2022, according to research from Point2, which offers housing-market analysis, with the total number of households growing to 136,697 from about 30,000.

The "typical" millionaire homeowner, according to Point2, is a 50-year-old chief executive or physician who owns a $1.8 million home.

Salaries soared amid pandemic recovery

Another factor that contributed to the increase in the number of seven-figure earners nationally was the rapidly evolving pay picture.

Boosted a surging stock market, CEO and executive compensation at public companies surged in 2021, with pay for CEOs of S&P 500 companies in 2021 reaching a record high.

The Economic Policy Institute estimated the average CEO pay at the 350 largest American companies in 2021 was $27.8 million, including stock awards.

And big pay bumps weren’t confined to the very top.

By 2022, American salaries reached a fever pitch in response to 2021’s tight labor market. Between April 2021 and April 2022, the Bureau of Labor Statistics reported median weekly earnings increased 4.2%.

That rate was even higher among technology and white-collar workers. Some software-engineer roles were paid 50% more in 2022 than they were just a few years prior.